Taxpayers pay tab for Blagojevich letter

Mailing to small firms pushes $6 billion levy

SPRINGFIELD — Gov. Rod Blagojevich spent $110,000 in taxpayer funds on hundreds of thousands of letters to small-business owners to clear up what he says is "misinformation" about his proposed $6 billion business tax.

The governor is appealing to businesses with less than $1 million in annual revenue, saying they would be exempt from the new tax that would force big companies to pay their fair share. Business critics of the plan said the letter misrepresents the issues.

"The very business owners he's trying to placate here are just furious about these letters. They are tired of the lies," said Kim Clarke Maisch, state director for the National Federation of Independent Business, an advocate for small businesses.

The governor proposed a new tax on business revenues last week as a way to generate billions for public schools and health care. The new gross receipts tax eventually would replace the corporate income tax.

Critics say the tax will be passed on to consumers and may force businesses to leave the state.

"I am writing to you today to set the record straight," Blagojevich wrote in letters that arrived at small businesses this week. He accused "loud voices in Springfield" of spreading misinformation that his "plan is bad for business and that your taxes will go up."

"Under my tax fairness plan, businesses with under $1 million in revenues will be exempt from the revised tax structure. This means that 75 percent of all businesses in Illinois will see no or little change in their taxes."

But an official at the Illinois Chamber of Commerce said Thursday that top Blagojevich aide John Filan told her at a briefing after the governor's budget address last week that small businesses would have to pay the gross receipts tax after the corporate income tax is phased out in four years. Filan said the tax would be lower than the one imposed on big companies, or at a fixed dollar amount, said Connie Beard, an attorney and a top chamber official.

The letters didn't mention anything about that.

"It offends me because they're [implying] that all of these [small-business owners] aren't going to be paying the gross receipts tax," Beard said.

Blagojevich spokeswoman Becky Carroll said that Filan believes Beard must have misunderstood him and that he was simply listing various tax options for small businesses after the corporate income tax ends.

The administration intends to keep the corporate tax in place for small businesses for now, then get comments from the small-business community on which tax system it would prefer, Carroll said.

The Illinois Department of Commerce and Economic Opportunity sent the letters last week. The $110,000 was for postage and supplies for 345,000 letters, said spokesman Andrew Ross, who defended the use of taxpayer dollars.

"We believe that people have the right to learn the facts and not the fiction that some groups are spreading to scare some businesses into rejecting the plan," Ross said.

In legislative action Thursday, the Senate passed a bill aimed at preventing prior restraint by prohibiting college administrators from reviewing student newspapers before they are published.